By Brendan O'Boyle
Mexican lender Banorte BMV:GFNORTE/O, which owns one of the country's largest banks and pension funds, posted on Tuesday a 1% uptick in first-quarter net profit from the same quarter last year.
In its earnings report, Banorte said the 1% profit increase was driven by strong loans, deposits and banking services, partly offset by higher provisions and weaker trading income.
Net profit reached 15.46 billion pesos ($862 million), just above an LSEG-compiled estimate of 15.44 billion pesos. Total revenue, which reached 43.48 billion pesos, also beat a forecast of 42.40 billion pesos.
Net interest income, the difference between what banks earn on loans and pay out in deposits, grew 10% year-over-year, which Banorte said was driven by efficient funding cost
management, loan portfolio growth and mix, and positive inflation adjustments in the annuities business.
The group said that its sale of its digital bank Bineo to financial technology firm Klar, launched as part of a larger overhaul of Banorte's digital strategy, remains ongoing.
Banorte also said it had absorbed Tarjetas del Futuro's credit card portfolio onto its balance sheet after buying out delivery platform Rappi's stake, and is winding down the entity as a discontinued operation.
In December, Banorte closed a $50 million deal to take control of Rappi's credit card business.
Provisions surged 36% in the quarter, mainly due to the addition of Tarjetas del Futuro's portfolio, updated risk models and a one-off troubled commercial loan, with the bank emphasizing the increase reflects precautionary measures rather than broader deterioration in asset quality.
In the first quarter, Stage 3 loans reached 18.26 billion pesos, up from 11.10 billion pesos a year earlier, driven by the commercial portfolio, the company said.
($1 = 17.9252 Mexican pesos at end-March)